New Delhi: India’s food inflation rate rose 16.44% in the week ended 1 May, an increase the government says will be arrested as prospects of normal monsoon this year may push prices lower.
The index had risen 16.04% the previous week.
Food prices are rising amid growing consumer demand for manufactured products, including cars and houses, stoking inflationary pressures in Asia’s largest economy after Japan and China. Industrial production in India grew 13.5% in March, gaining more than 10% for a sixth month.
The trends in domestic growth and inflation warrant further policy normalization by the Reserve Bank of India (RBI), Indranil Pan, the Mumbai-based chief economist at Kotak Mahindra Bank Ltd, said in a report on Wednesday. RBI is likely to continue normalizing its policy in a calibrated manner.
The central bank has raised interest rates twice since mid-March to slow inflation on concerns that high food prices will lead to wage-rise demands.
Food prices in India have stayed above 15% since November after last year’s monsoon was the weakest in almost four decades, hurting sugar, rice and wheat output.
India’s benchmark inflation rate rose to 9.9% in March, a 17-month high. The commerce ministry will unveil April’s inflation data on Friday.
Finance minister Pranab Mukherjee had on Wednesday said that prospects of sufficient rains this year will help bring down prices.
The weather department expects June-September rains to be 98% of the 50-year average in this year’s monsoon season, which it described as normal.